Individual industries have different drivers, trends, risks, opportunities and rates of change. For many years, United States manufacturers have experienced unique market conditions and 2020 is no different. So, what are the larger issues as manufacturers plan for 2020 and how can manufacturers proactively plan for success? Here are six areas of evolution that will impact business performance next year.
1. A Market with More Potential Risk
Even as tariff issues are resolved through new trade agreements, there are enough factors to keep manufacturing execs watchful: raw material prices, a likely economic slowdown, a slowdown in purchases due to an election year, and a continued tight labor market. The best approach is to set up a process of continuous monitoring by selecting a few leading indicators to watch monthly—especially the monthly ITR trends forecasts for industrial production and capital goods. These indicators will help you plan contingencies and mitigation strategies before risks actually appear.
2. More Balanced & Integrated Marketing
Many manufacturers still rely solely on the marketing basics of a website, sales collateral and trade shows. In 2020, manufacturers will challenge these historic components of a marketing plan by looking closely at the performance of these traditional activities in generating new leads and return on investment (ROI). A shift in marketing budgets from 50 percent-plus invested in trade shows to other go-to-market programs is likely. Targeted marketing programs will become a more significant marketing investment area to replace traditional industry shows. Don’t buy in to the oft-cited belief that customers will think you have gone out of business if you reduce trade show attendance. There are many marketing programs that will yield higher quality forms of prospect and customer engagement and at a lower cost. There are at least 37 digital programs options. Good digital programs to consider include account-based marketing (ABM), search engine optimization (SEO) and paid search on LinkedIn, for example.
3. The Gap Between Good & Bad Trade Shows will Widen
A companion trend to “smarter” marketing by manufacturers reducing their reliance on trade shows will come as trade shows themselves evolve. There are currently too many poorly managed, poorly delivered shows found in many segments of manufacturing. At the same time, we will see continued refinement of well-managed shows—shows with excellent pre-show marketing, strong vendor participation, excellent informational and educational content, and use of digital communications and targeting.
4. The Evolution of Industry Trade Associations
Many associations are show sponsors, and when the shows decline in value and attendees, so will association influence, income and value. Many industry associations claim their members don’t see the value they provide and are struggling to keep current membership levels. Associations that thrive will demonstrate three characteristics:
- Adoption of innovative marketing programs for member acquisition and retention
- Understanding and acting on what their members need by being market-facing and understanding voice of customer/member
- Developing new areas of value-add. For example: Many trade associations are excellent at providing technical training for operations and plant staff. Why not also help the business side of their members’ organizations by helping them with sales and marketing best practices? In addition to making members more productive and addressing the cost side of business, help them grow proactively and profitably.
5. Market & Customer Diversification
With looming economic issues, many manufacturers no longer find themselves confident in their limited market and limited customer business models. We have seen an almost across the board need for manufacturers to diversify revenue and profit streams and to reduce customer concentration risks. This is always a good goal, but an even higher priority when facing economic disruption.
6. Extending Operational Excellence from the Plant to the Front Office
Most U.S. manufacturers are good operators. They have remained competitive in the face of challenges from offshore competitors, technology disruption and labor availability. One area they are not very competitive in their front office—especially sales and marketing. There are several reasons for this, but probably most directly tied to most manufacturing CEOs having an operational (versus sales or marketing), background. The highest performing manufacturers are those that combine operational excellence with a strong growth plan. Rather than remain minimally engaged in applying best practices in sales, pipeline development and marketing, the higher performers will realize that the language, practices, and principles of operational excellence and continuous improvement are just as valuable when applied to the front-end of their businesses.
Wayne Gretzky was asked what made him so successful as a hockey player, to which he replied, “I skated to where the puck was going instead of where it was.” I would like to offer the same advice to manufacturers looking for a strong year in 2020. Hopefully these six trends will help refine your direction.